Lord Davies of Oldham: My Lords, the Treasury keeps under the closest review all attempts at drawing up cost-benefits analyses of European membership, which all have flaws and are all too limited. But I agree that we should be open and transparent about our proceedings. One dimension of that is, first, that we produce an annual report on our expenditure with regard to Europe—a report was published this very week in those terms—and, secondly, that we intend to extend that by producing an analysis of how EU money is spent in Britain and accounting for it.

Lord Tyler: My Lords, when will the Government honour their manifesto promise to put to the people in a referendum the issue of elections to the House Commons? Does the Prime Minister designate regard this issue as a vital ingredient in his campaign to reconnect citizens with their Parliament? I am grateful to the Minister for indicating that the report will take into account recent elections, but will she take this opportunity to reiterate and emphasise that the 141,891 spoilt ballot papers in Scotland were on the first-past-the-post and top-up ballot paper and not on the proportional representation STV ballot paper for local councils? Clearly the citizens understand how well the system can work; can she confirm that the ministry does as well?

Lord Maxton: My Lords, does my noble friend agree that however undemocratic the first-past-the-post system may sometimes seem, if we look at what is happening in Scottish local elections, we see how undemocratic PR can be. Small minorities are beginning to rule the roost and the larger parties are not being given the power they should be in the local authorities? Is my noble friend aware that before 1914, when the Liberal Party was last in power, it was opposed to PR and the Labour Party, which was then a small minority, was in favour of it?

Lord Davies of Oldham: My Lords, the Government recognise the important impact of climate change on the United Kingdom's tourism industry in all its myriad activities and locations. Government at both national and regional level agree that sustainability must be fully integrated and built into all tourism policy and practices. That has been our approach and that of our partners in developing the 2012 tourism strategy. Much has already been achieved to meet environmental challenges head on.

Lord Davies of Oldham: My Lords, I hate to disillusion the noble Lord, but a long question is no guarantee that the answer will be any more precise. I assure him that we recognise the case which he advocates for daylight saving. I know that he has strong links with Scotland. As he will know, support for daylight saving is not universal in Scotland. He will also know that that there have been changes in Scottish politics in the past month or so which mean that the Government ought perhaps to adopt a consultative stance on this issue rather make a dramatic intervention at this point.

The Lord Bishop of Manchester: My Lords, in the long term, climate change is likely to make parts of northern England very attractive for people from Europe to come to on holiday. Have the Government yet begun to give any long-term thinking to the kind of infrastructure required to enable that to benefit the north of England? And has the Minister noted the report in the newspapers today that the Lonely Planet guide has said that, in the event of London becoming too hot and uncomfortable to be in, Manchester is already available and appropriate to be the capital of this country?

Lord Triesman: My Lords, the EU-Russia summit was held on 17 and 18 May as planned and covered a broad agenda, including international relations, energy, climate change and trade. The EU raised human rights. The summits are important, as they allow both sides to engage on issues that are important to them, including on areas of disagreement.

Lord Wallace of Saltaire: My Lords, I thank the Minister for that reply. Does he welcome as I do the achievement of a common position in relation to Russia by the EU on this occasion in a period when it is clear that the Russian Government and major Russian state companies are trying to pick off European states one by one. I note in today's Financial Times, for example, that Alexander Medvedev, the international director of Gazprom, says:
	"I don't want to interfere in the practice of the European community and its policy co-ordination ... but"—
	and he then goes on to praise Austria for considering a bilateral deal. Is it not clearly in Britain's national interests, given our gas interests, the Litvinenko case and others, to pursue a common position towards an increasingly difficult Russia?

Energy White Paper

Lord Truscott: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
	"I should like to make a Statement on the energy White Paper and the consultation on the future of nuclear power, which I am publishing today. Copies of these, together with a number of other accompanying papers, are in the Vote Office. "Mr Speaker, as I said last year, we face two big challenges: first, the need, with other countries, to tackle climate change by cutting greenhouse gas emissions; and, secondly to ensure that we have secure and affordable energy supplies. Both are vital for our future prosperity. Both are global issues, calling for action internationally as well as action here at home. "The evidence supporting the need for urgent action on climate change continues to mount. Sir Nicholas Stern's report last autumn underlined the importance of acting now and together with other countries. If not tackled, climate change poses catastrophic humanitarian consequences and economic costs. Meanwhile, world energy demand continues to grow. It is expected to be 50 per cent higher by 2030 than it is today, and it is likely to be met largely by fossil fuels for some time to come. That means rising greenhouse gas emissions and greater competition for energy resources, which have massive implications for both climate change and security of supply. "Here in the UK, our reserves of oil and gas are declining. While significant amounts still remain in the North Sea, production has hit its peak and is now falling. As we make clear, we will make the most of the reserves that we have, but as our economy grows we will become increasingly dependent on imports in a world where supplies are concentrated often in less stable regions. We need to take action to manage the risks that this brings. Over the next few years, energy companies will also need to replace ageing power stations and other infrastructure. So we need to create the right conditions for this investment to get timely and increasingly low-carbon energy supplies. "The White Paper sets out a long-term framework for action to address these challenges at home and abroad. It sets out our international strategy, which recognises that we need to tackle climate change and energy security together. Influenced by the UK, the European Council has agreed to a new strategy, including commitments to competitive markets, cuts in greenhouse gas emissions, more renewable energy and a central role for the EU Emissions Trading Scheme as the potential basis for a global carbon market. We also need to influence the wider international community, notably in getting a consensus on the post-2012 Kyoto framework for reducing greenhouse gas emissions."The White Paper also sets out the measures that we are taking here at home. We have already published a draft Climate Change Bill, which for the first time would impose a legally binding duty on the Government to reduce the amount of carbon that is produced, as we work towards our target of achieving at least a 60 per cent reduction in carbon emissions by 2050; we are the first country in the world to do so. "Faced with these challenges, more is needed. The first priority must be to save energy, so the White Paper sets out a range of measures to help us to become more energy efficient and to cut energy use."Consumers need better information as to how they can save energy. Next year and the year after, any householder who asks for them can get free, visual real-time displays of how much electricity they are using. In parallel, we will work with the industry to ensure that consumers have visual displays, together with smart meters, in 10 years. In addition, better and clearer energy bills will help."It is estimated that leaving electric appliances on standby uses about 7 per cent of all electricity used in UK homes. That is equivalent to the electricity generated from two 600-megawatt gas-fired power stations or more than 1,500 2-megawatt wind turbines. So we will work with industry and others to improve the efficiency of domestic appliances, to phase out inefficient goods and to limit the amount of standby energy wasted."If we are to make a real difference in reducing energy demand, we need a stronger obligation on energy companies to provide their residential customers with energy-saving measures. So the White Paper proposes that from next year they double their current efforts and, from 2012, we aim to transform the way in which they see their relationship with their customers, shifting the focus to the provision of energy services, increasing energy efficiency and saving carbon in the home, rather than simply selling them gas and electricity. We will also require big organisations such as supermarkets, banks or hotel chains and large public sector organisations to limit their emissions and to set tougher standards for the homes that we build and the products that we buy."We need more low-carbon generation of electricity and heat. We want to encourage the enthusiasm of individuals and communities to generate their own energy locally, such as in homes or schools, through solar panels and wind turbines. We are therefore bringing forward a range of measures to support this approach. As part of this, we will be removing barriers and simplifying licensing, so that more communities can the follow the example of Woking, including, for example, by developing combined heat and power schemes. "However, we still need large-scale energy investment. Over the next 20 to 30 years, we will need new generating capacity equivalent to over a third of our existing capacity. Our aim must be to ensure that companies have a wide range of options available, so that we can retain a diverse energy mix, which is good for our security of supply and will help us to move to an increasingly low-carbon economy. "Renewables are of crucial importance. So we are strengthening support for renewable electricity. The reform to the renewables obligation is essential and will mean, we expect, that by 2015 around 15 per cent of our electricity supplies will come from renewables—triple the amount that we have today, achieved in just eight years."In transport, the road transport fuel obligation will save a million tonnes of carbon a year. We want to double it, only if we can be satisfied that it is sustainable to do so."New technologies will also help. We want British-based business to be at the forefront of new green technology. That is why we set up the Energy Technologies Institute, which brings public and private investment together, and now has a minimum budget of £600 million. We are launching a competition for the demonstration of carbon capture and storage, which has the potential to reduce carbon dioxide emissions from fossil-fuel power stations by as much as 90 per cent, which is important, as we will rely on gas and coal power, including coal mined in the UK, for some time to come. Details are set out in the White Paper. "We want to save energy. We want low-carbon sources of energy. That is why we will do everything that we can to encourage renewables such as wind, wave and tidal power. But that alone will not be enough if we are to minimise our costs and risks."Alongside this White Paper, we are publishing a consultation document on nuclear power, so that we can take a decision on whether companies should have this option when making their investment decisions. We have reached the preliminary view that it would be in the public interest to allow energy companies to invest in nuclear power. But before we make our decision, we are consulting further."The White Paper makes clear the complexities of the challenges that we face in terms of climate change and energy security. There is no single answer to these challenges. We believe that there needs to be as wide a choice of low-carbon options as possible, so that we do not become over-reliant on any one form of electricity generation. Nuclear is an important part of our energy mix at the moment. We currently get about 18 per cent of our electricity from nuclear power stations—a low-carbon form of generating electricity. It provides a regular and steady supply of electricity, whereas electricity generated from most renewables is, by its very nature, intermittent. Every year a modern nuclear reactor saves about 2.5 million tonnes of carbon dioxide being pumped into the atmosphere compared with an equivalent gas-fired station. "Most nuclear power stations are set to close over the next 10 to 20 years at a time when we know that demand for electricity is going up because of economic growth. Quite simply, in the public interest we need to make a decision this year on whether we should continue to get some of our electricity from nuclear, because new stations take a long time to build. "If nuclear is excluded, there is every chance that its place will be taken by gas or coal generation, which of course emits carbon. Yes, carbon capture and storage, if it can be developed, would help, but at this stage we cannot be certain of that. There is no commercial-scale operation of carbon capture and storage on power generation anywhere in the world. And, although we want to get more renewable energy as part of the mix, it, too, is controversial. There are over 170 applications in the planning process at the moment. "It will be for the private sector to initiate, fund, construct and operate new nuclear plants and cover the cost of decommissioning and their full share of long-term waste management costs. There are important issues to consider, including the question of waste. They are considered in the consultation, which will run until October. "Our measures, including those in the White Paper, put us on track to make savings of carbon emissions of between 23 million to 33 million tonnes by 2020. Put another way, if we met the upper end of this range, it would be the equivalent of removing all the emissions that we get from every car, van and lorry on Britain's roads today. "By saving energy, encouraging new timely investment in gas import and storage infrastructure and maximising recovery of UK reserves of oil, gas and coal, our measures will also help security of supply. We cannot become a low-carbon economy in a single step. Further measures will be needed if we are to achieve our long-term goals and in the light of further international agreements in Europe and more widely. "The White Paper sets out a framework for action to enable us to make real progress now towards tackling climate change and ensuring secure and affordable energy supplies. I commend the Statement to the House".

Baroness Wilcox: My Lords, I thank the Minister for giving me advance sight of the Statement. The White Paper and the Statement accompanying it are characterised by one thing: confusion. The Government say that certain things must be done but their policy, at best, says only that they might be done. The current Prime Minister says that the replacement of nuclear power stations is back on the agenda with a vengeance. The future Prime Minister says that a new generation of nuclear power stations will be built across the country. Yet the most that the Minister has promised today is that nuclear plants could be part of the future energy mix and that it is for the private sector to take decisions over new power stations.
	However it is dressed up, nothing in the White Paper guarantees that a single nuclear power station will ever be built. Where has the Prime Minister's "back with a vengeance" gone in relation to nuclear power? It is certainly not here. Are the Government saying that the nuclear new build will definitely happen or not? How many new nuclear power stations will definitely be built as a result of this White Paper? Does the Minister have a plan B if Scotland rejects nuclear power and, if not, how does he expect the Government to deliver a UK-wide energy policy? If the SNP has rejected both nuclear in principle and wind in practice, can the Government acknowledge that the policy is anything other than lunacy?
	Business will of course invest in nuclear power only if it knows what it costs. Without certainty about carbon, decommissioning and waste, it is almost impossible for businesses to take a realistic interest. The Government have given absolutely no greater clarity on those issues today, so what happens if no one comes forward to invest?
	Over a year ago, the Prime Minister said of new nuclear build:
	"If we don't take these long-term decisions now, we will be committing a serious dereliction of our duty".
	Today in the Times, he just says that we must "consider" it. But can the Minister tell noble Lords exactly what decisions have been taken today to address this dereliction?
	Last July, we in the Conservative Party set out our objectives. We called for a cap and trade scheme for C02 based on auctioned rights, for site and type licensing and for reform of the renewables obligation and climate change levy. In addition, we said that there must be long-term certainty for investors. As we, as a party, have said again and again on environmental issues, if that could lead to broad agreement between us and the Government, that would be very good for Britain. Today's announcement contained detailed proposals for banding the renewables obligation, but those will not overcome its central flaws. On what basis, therefore, has the Minister assessed and chosen to reject the considered alternative put forward by Ofgem?
	Hidden in this Statement is bad news about carbon capture. Will the Minister confirm that the failure of this Government to agree a pilot project for it means that any prospect of its happening has already been seriously delayed—or should I say postponed? Is not the real truth that, far from being on the edge of happening, carbon capture is about to be deferred and endangered? I wonder how on Earth CCS will ever get off the ground if it is still constrained by the climate change levy. When will the Government remove the perversity of keeping a dirty tax on a clean process?
	On strategic infrastructure projects, we welcome site and type licensing and the streamlining of the planning process. However, I have grave concerns about entrusting that to an unaccountable quango.
	The Conservative Party policy statement last July called for greater use of carbon trading. A broad and rational regime for carbon trading is, in our view, crucial for incentivising low-carbon technologies. The Government's announcement that they will broaden the scope of carbon trading to cover a greater number of businesses is, therefore, welcome. It is our view that permits should be auctioned. Will the Secretary of State tell us how and when they will be?
	Climate change is the greatest threat that we face. That is why the Government had the support of the Conservative Party in signing up to tough EU targets on emissions and renewables in March. At present, we get just 2 per cent of our total energy from renewables. Raising that to 20 per cent was always going to be challenging. Is it not true to say that today's plans will at best get us only about half way to that target? Is it not also the case that, despite the clear wish expressed in the White Paper to encourage local and decentralised energy, there is almost nothing that amounts to a robust policy that will really make it happen?
	Again and again, this White Paper wills the ends but not the means. In households, smart metering could greatly increase energy efficiency and help customers to export electricity back to the grid. But the Government are putting their support behind the limited clip-on visual electricity displays. Does that intervention not pull the rug from under the real smart meter market? Why are the Government going for the most basic option, when real smart meters would help to stimulate the microgeneration industry?
	Today's announcement has already been twice delayed. It is Labour's third White Paper, following dozens of consultations, and the product of their third energy review, under their ninth energy Minister. It is yet another symptom of a wasted 10 years—10 years that have rendered the next 10 years a Herculean challenge for whoever has to take it on.
	The White Paper offers nothing definite on nuclear or anything else. It heralds the collapse of carbon capture, while continuing an irrational regime for carbon penalties and incentives. It provides little or no prospect of hitting renewables targets and it does not offer the security that the country so urgently needs. The Government have had 10 years to think about their energy policy, and 10 months since the energy review to get it right, but what we are left with is not a carbon-free future, but a content-free promise.

Lord Truscott: My Lords, I do not recognise the confusion which the noble Baroness, Lady Wilcox, describes in the White Paper. I think that our position is absolutely clear. She also made some points on the consultation process for new nuclear build. The consultation on new nuclear build will be full and run over 20 weeks. Afterwards the Government will have a period of reflection and then take our final decision. As noble Lords said, we published our energy review last July and said that nuclear should form part of the future low-carbon energy mix. That is still our view.
	The exact number of nuclear stations has not been decided. However, if we take no action, our nuclear capacity will decline over the next few years from about 18 per cent to 6 to 7 per cent. That would have a big impact on our emissions as that capacity would have to be replaced by gas or other forms of generation which are not as low-carbon. Security of supply issues would also arise.
	The UK's policy on renewables is clearly laid out in the White Paper: our strategy is to triple the amount of electricity generated from renewables between now and 2015.
	The noble Baroness also mentioned investment in nuclear and asked why energy companies should invest in it. Energy companies have shown a lot of interest in investing in new nuclear in the UK. EDF has said that, providing that the Government make a decision relatively swiftly, it could have a new nuclear power station up and running by 2017. On subsidy, E.ON has said that it would require no subsidy whatever to build a nuclear power station in the UK. I do not see an issue there.
	Our view on the EU Emissions Trading Scheme is that it should be strengthened. We want to ensure that there is a robust price for carbon. The EU ETS was particularly weak in its first phase but has strengthened somewhat in its second phase. We want to strengthen it further in its third phase.
	The renewables obligation will be worth £1 billion annually to the renewable sector by 2010. We are consulting on the banding of the renewables obligation specifically to ensure that there is more support for the renewable technologies that are currently not viable. We are therefore looking at offshore wind, tidal and marine technologies and ensuring that we give more support to them than to others such as onshore wind and biomass.
	We looked at the previous Government's feed-in tariffs but felt that they were not effective in boosting renewables. Under the renewables obligation this Government have doubled the amount of renewable energy, with considerable increases in , for example, wind generation. It took 14 years to develop the first gigawatt of wind energy in the UK, and 20 months to develop the second. Only eight countries in the world, including the UK, have reached that level of wind generation.
	I do not see the problem that the noble Baroness outlined on carbon capture and storage, which is going ahead. We are having a competition and expect to have the details in place by November 2007, and we are working closely with energy companies to take it further. We intend to proceed as the first country in the world to have a demonstration project for carbon capture and storage. As noble Lords will know, although CCS exists in a number of forms, no one has yet succeeded in putting the technology together on a commercial scale.
	I acknowledged what the noble Baroness said. I mentioned the carbon reduction commitment and the benefits that it would have. I agree with that. We are currently on target to achieve a 60 per cent reduction in CO2 emissions by 2050. The White Paper outlines how we will achieve that.
	On smart metering, the benefits of which were mentioned by the noble Lord, Lord Redesdale, I agree. If I may say so, the noble Baroness seemed to be misinformed about our proposals for smart metering. We are not abandoning it in favour of visual display units; we propose that they be introduced for all businesses within five years, apart from the smallest businesses, and within 10 years for domestic users. We are also offering the opportunity of visual display units free of charge for consumers during the next couple of years.
	The noble Lord, Lord Redesdale, mentioned Scotland. Of course we do not intend to change the devolution settlement. The Scottish Executive have certain powers on planning matters and those will remain the same. We have undertaken some contingency work dependent on the final outcome of the consultation, but we are looking at strategic siting assessments for new nuclear power stations, which will obviously take into account the issues that he mentioned concerning rising sea levels.
	On carbon capture and storage, the noble Lord pointed to page 175, paragraph 5.4.18 of the White Paper. The intention is that the first commercial-scale demonstration of CCS will be brought on stream between 2011 and 2014. That will be part of the bid criteria; proposals will have to take that into account. Companies will have to promise that they will deliver in that timeframe a UK CCS programme. These things take time, but if we do not take the decisions now, we will not have a CCS demonstrator in that timescale. Time is pressing, we are aware of that. That is why we are proceeding with all speed on the matter.
	I agree with the noble Lord, Lord Redesdale, that energy saving is very important for both businesses and individuals. We have ensured that there will be a successor to the carbon emission reduction target which will double the obligation of suppliers to introduce energy-saving measures. The Government's plans to introduce zero-carbon homes by 2016 will also reduce CO2 emissions and make individuals think more about their carbon footprint. That is very important.
	On the renewables obligation, which I mentioned briefly, I return to the point made by the noble Lord, Lord Redesdale. As I said, it will be worth £1 billion a year to the sector by 2010. We have the marine renewables development fund, which contains £50 million to support tidal power. We are establishing the Energy Technologies Institute, which will have a budget of £600 million over 10 years, which will support a range of new renewable technologies. We have invested about £500 million in development grants for renewables. As I mentioned, we are looking at a renewable banding to give more support to wind and tidal power, among others.
	Will nuclear power be included in the renewables obligation? No.

Lord Tanlaw: My Lords, we have waited a long time to get a White Paper on this subject. I instigated a debate on this subject in 1978. The science has not changed, and the situation has not changed, so why has it taken so long to get to the point where there is a plethora of White Papers on the problem of carbon? Is it because of the division among scientists that carbon may not be the main cause of the problem? Indeed, the ice cores that have been collected and analysed in the intervening 29 years have indicated that global warming occurs before an increase in atmospheric carbon. Just as one cannot have smoke without fire, one has to have fire first. Secondly, there has been no mention of methane. The latest papers written by Kepler and Röckmann and published in Scientific American earlier this year indicate that growing crops, especially crops to produce biodiesel, may greatly increase atmospheric methane. Why has there been no discussion about this? Before we enter into a whole mass of legislation and new taxes, the science should be looked at again. The latest report from Russia is that the planet Mars has increased in temperature over the past 25 years in exactly the same proportion as the Earth has increased in temperature. Therefore, is solar radiation perhaps the cause of our problem?

Lord Truscott: My Lords, the noble Lord says that the situation has not changed since 1978. Although I have not been in your Lordships' House for that length of time, I can certainly say that from my standpoint things have changed since the publication of the previous energy White Paper in 2003. That is for two main reasons. First, the science on climate change widely accepts that it is manmade and is accelerating. I do not need to go into the details of the IPCC report and Sir Nicholas Stern's report. It is now broadly accepted across the world, including in the United States and China, that there is a problem with climate change, that it is accelerating and that we need to tackle it.
	The second reason, security of supply, did not exist in the same way even back in 2003. The relative price of energy and fossil fuel has increased quite dramatically since then. Increasingly, we are becoming more dependent on less stable parts of the world for our energy. We are witnessing a faster decline in our North Sea resources than we envisaged, which increases our energy dependence. By 2020 something like 80 per cent of our gas will be imported. While we currently import about 30 per cent from Norway, it is a fact that we will have to look further afield for our gas to countries such as Qatar, Algeria, Trinidad, parts of Africa and central Asia—leaving Russia apart. Therefore, we need to increase the diversity of our supply. All those points, particularly tackling climate change and ensuring our security of supply, have changed the argument on nuclear from where I stand.
	On methane, the noble Lord mentioned energy crops and the importance of sustainability, with which I would agree. On deforestation, we should ensure that the actions we take in the UK and Europe do not have detrimental effects on developing parts of the world. We ought to be very aware of that.

Baroness Miller of Chilthorne Domer: My Lords, does the Minister agree that there are many ways to harness the power of the river Severn that do not include the barrage? It is not a question of either/or; the generation of 5 per cent of our electricity could be achieved by accessing the tidal stream on the Severn in a variety of ways. Can he comment on power loss during transmission through the National Grid? Are the Government considering the development of more localised, regional grids?

Lord Truscott: My Lords, the noble Baroness is right that we can look at other options in the context of the river Severn; the barrage is just one of those. It would be a large, extremely expensive and complicated project, but it would have real potential benefits in terms of renewable generation. However, as I say, we can look at other options. We are looking closely at the distribution of energy through the National Grid so that the barriers to distribution are reduced to make the grid work more effectively, and ensure that we bring on the localised use of energy, particular from renewable sources.

Lord Truscott: My Lords, I am grateful to the right reverend Prelate. On the question of the dash for gas, I agree with him that we need a diverse energy mix and that we should not be over-reliant on any one particular form of supply. Gas currently generates approximately a third of our electricity, as does coal, but this can vary. When we encountered tightness in energy supplies a couple of winters ago, the amount of electricity generated by coal rose by 50 per cent, but as a result we found that CO2 emissions went up. We have to have a diverse energy mix both to ensure security of supply and reduce CO2 emissions. One of the ways of doing that is to develop carbon capture and storage. However, a number of issues arise with CCS. Several countries are already using parts of the available CCS technology. The Norwegians, for example, already store gas offshore, and the energy sector has often used the injection of gas to enhance the exploitation of oil and gas fields. There are regulatory issues in this area, such as the London and OSPAR conventions, which need to be amended to ensure that we can store gas under the North Sea. While the London agreement has been amended, the OSPAR agreement has not, so there are legal issues to consider. But the main point is that no one in the world has put all the different elements of the technology together and shown that they can work on a commercial scale, and that is really the task of this programme.

Lord Judd: For the convenience of the Committee, I propose to speak to Amendments Nos. 39 and 40 as well. I should first make it clear that I have worked for much of my life in the voluntary charitable sector and am still a trustee to a number of organisations in that sphere.
	Perhaps I could say a brief word about Amendment No. 39. If we are talking about relationships between government institutions, the public sector and, for example, the voluntary sector, it is terribly important to understand the nature of governance in the voluntary sector. It is very important that the language should be clear to those who operate within its culture. While I quite understand what is intended in terms of accountability and the rest, to refer simply to "a person" is confusing for the voluntary sector. Its great strength is that it indulges in meaningful collective leadership in which trustees, for example, are individually and collectively responsible for everything the charity does, everything it says, and all its expenditure. To include words such as "institution" would be helpful in making clear what is really involved in a genuine working together.
	I have a few more words to say on Amendments Nos. 38 and 40. I am a little troubled that we are going rather far in a new concept of the voluntary sector—and, indeed, charitable organisations within it—having a primary role as sub-contractors to government with whom contracts are made because they can deliver, to their credit, efficiently, sensitively and more cheaply than the public sector itself.
	My anxiety is that we will throw the baby out with the bathwater. In our history, charities and voluntary organisations have been about a great deal more than that. They have, at their best, been about leading in social responsibility, creating, by their pioneering work, a situation in which society as a whole faces up to responsibilities and moves in. They have a catalytic role. It therefore seems to me that when a relationship is being struck in the context of the Bill between the Government or their agents and the voluntary sector, it has to be a negotiated partnership. The best NGOs—if I can put it that controversially—will not make bids simply to get contracts. They will make bids because they are concerned about work in that sphere, because they believe that they can bring additionality and that they have special insight and qualities to offer in meeting the need. It should be very clear that in undertaking a relationship, there has been a genuine dialogue and that the conclusion about the nature of the relationship is mutual and shared by both, with as few reservations as possible, preferably none.
	I referred to this at Second Reading, when I drew attention to a voluntary organisation with which I had been associated. It had been doing work in a young offender institution and its contract was to get people into jobs. It was marked under the competitive bidding system by its success in getting people into jobs, but it was concerned about the pressure that came to bear on it when it could see that some of the people with whom it was working were not yet ready and that a lot more support was needed before they could be shoved into a job, which would probably have been a counterproductive experience if more work had not been put into preparing them. It was going to lose points. It received absolutely no credit for the work that it did in counselling. There must therefore be a spirit of imagination, flexibility and room for adjustment in the way in which this co-operation is undertaken. There has to be a working partnership, and not simply a detailed contract, cast in stone, by which the voluntary organisation will be judged.
	There is a further anxiety. It is a controversial point and it is only right to make it in the context of this debate. Among some of the better NGOs, with a history of working in spheres such as this and with real concern, insight and experience, there is an anxiety about—how should I put it?—less reliable NGOs springing up, largely motivated by the concept of getting contracts to undertake government work. Due to their more limited and narrow approach, such NGOs might well be able to underbid organisations that, by their nature, will have a more professional, considered and thorough approach to what they are undertaking. That is why I have proposed these two amendments. They are obviously probing amendments, but I hope that my noble friend, with all her personal experience, quite apart from her ministerial responsibilities, will accept my point and be able to make some reassuring observations when she replies. I beg to move.

Lord Ramsbotham: I, too, support the noble Lord, Lord Judd, in his amendment. As the Minister knows, we are all with her in the ambition of what she seeks to achieve, but the question is the method. We have frequently drawn attention to the need to listen to the voice in the field. My contribution is based on six short statements made on 2 May in a keynote speech to the Probation Centenary conference by Ellie Roy, the chief executive of the Youth Justice Board, entitled "Commissioning—the Youth Justice Experience". My concern, in line with what the noble Lord, Lord Judd, said, is that a great deal of this Bill flies in the face of the practical experience of the Criminal Justice Board. I want to read the statements made in the speech, because I think that they explain why. Ellie Roy said that,
	"you need as a commissioner to be able to work with your providers to look at how you want to change things, what is actually going to be achievable and you ... need to listen to the real operational concerns and operational issues which your providers tell you about and you need to give them discretion in how they actually deliver a lot of the services".
	The risk is that,
	"you can set out on a process which initiates some huge upheaval in the services that you're responsible for or that you're trying to change and you may do that against very weak data and a weak evidence base and you may then not be in a position to make a sound judgement on the results".
	She remarked that,
	"one of the things that as a commissioner you've got to remember is that you do have providers in the field who know their business and know it well, who have experience and expertise and you need to work with the grain of that rather than coming in and thinking that you can tell people exactly what to do and what changes need to be put in place".
	She also said:
	"As a commissioner you should be able to use contestability to select the best provider who will provide best service for the lowest cost. But again, it's not as straightforward as it seems. Some of the constraints that we face are, first of all, lack of new money to invest in any transformational change. Everybody knows how constrained the public purse is at the moment and we have to make the money that we've got work to change and that gives us some real problems because if we wanted to rebalance the costs across the three sectors"—
	that is, the public, the private and the voluntary—
	"there are some real issues around that, particularly in terms of the expertise and experience",
	that some have,
	"and the fact that they deal with the most vulnerable populations ... so we have to think very long and hard about that".
	She also pointed out:
	"It's very difficult as a commissioner, to judge the ability of competing providers to deliver a quality service. What looks good on paper in a bid is not always deliverable and it is difficult to judge whether too many corners have been cut and some of the bids that come forward ... are actually as robust as they seem in the reality. For us, we are actually dependent on monopoly suppliers whether we like it or not and there are some real risks in moving beyond those suppliers".
	She sums up:
	"The conclusion that we've come to"—
	that is, the Youth Justice Board, over time—
	"is that we really do need to work in partnership with the providers that we've got ... They ... have the experience and we need to work with them, and ... build a confident relationship, and ... trust between us, if we are gong to see the change that we all want".
	I do not think that you could put it more clearly or succinctly than that. If we think that we can push change in a different way, we are deluding ourselves.

Baroness Anelay of St Johns: The amendment addresses the danger that a conflict of interest may arise in the provision of services by a system of tendering for contracts under the contestability system. Concerns have been expressed throughout the debates on the Bill, within Parliament and outside it, about the conflicts of interest that could arise in certain circumstances, and my amendment seeks to find a way around that.
	The prime example of where a conflict might arise is where the same party is responsible for writing reports for the court as well as providing the services that might be recommended in those reports. The fear is that the party might be tempted to support its own services and generate business in that way.
	At the moment, the preparation of court reports appears to be protected from contestability, at least for the time being, by the provisions of Clause 4. But of course that protection may be removed at some stage in the future by secondary legislation under the terms of Clause 12. Once that has happened, there is a distinct possibility that a conflict of interest could arise.
	It is obvious that if a recommendation is made in a report to a court for a particular disposal, there must be no hidden interest in it. At present, it is not possible for that to happen since the reports are prepared by members of Napo, but in the future, if reports are prepared by private companies or voluntary organisations whose business is also the running of programmes of rehabilitation, it is just possible that a conflict of interest could arise. I am grateful to the National Association of Probation Officers for its helpful briefing and its support for the amendment.
	The amendment would add a new subsection to Clause 3. It imposes good practice on the providers of probation services with regard to the avoidance of a conflict of interest. I beg to move.

Baroness Linklater of Butterstone: I support this important amendment which seeks to address the conflicts of interest which may arise from introducing contestability into the process of providing probation services. Specifically, if the providers come from the private sector, their services will be related to the profitability of the organisation and their need to justify their effectiveness and financial management to their shareholders. As professional providers of a service, it is fundamental that the advice they give should be absolutely impartial and disinterested. There should not be the faintest suggestion or implication that such advice is driven primarily or in part by any financial interest to them.
	Profitability is clearly a key driver in the management and administration of any private company. The integrity of the organisation must be beyond question and at all times their services must have the best interest of the client groups as the central focus. Their profitability should not be seen to be at the expense of professional standards and best practice. We have just heard about the risk of a potential conflict of interest that exists if advice is given to a court by a private provider whose business will benefit if it is taken, or if a probation trust signs a contract with a private company for its services and has a judge or a magistrate as a member. Will the Minister clarify this issue?
	Where contestability is part of a bidding process for the provision of services, the providers will seek to demonstrate that they can provide better services at a better rate and represent better value for money than other bidders. To many people, this bidding process does not lie easily with putting the needs of beneficiaries of a service first, be they victims, offenders or the community. Clearly, there has to be some guarantee of high standards where best practice can be demonstrated first. There is a delicate and often difficult balance to be struck here, and it is uncharted territory where criminal justice issues are concerned. In their document, Reducing Crime, Changing Lives, the Government stated that their interest in the process of contestability lay in getting,
	"the most cost-effective custodial and community sentences, no matter who delivers them".
	This process has been in operation in the private prison sector, where four different companies run nine prisons. The process has been perceived to have had the effect of forcing the public sector prisons to raise their game, reduce their costs and win contracts from their private sector competitors. While this was seen to be true in the early days, some private prisons have in the recent past received seriously critical inspection reports. Indeed, one of them was the subject of a truly shocking television programme. It has been stated that contestability has reduced costs in prisons by worsening terms and conditions for staff and increasing workloads and hours worked. Those which were performing badly were found by Her Majesty's inspectors to have dangerously low staffing levels. It is axiomatic that best practice requires that staff work on a one-to-one basis to achieve the best outcomes. To cut down staff will inevitably lead to poorer outcomes. As we now know, salaries are generally lower, the level of training poorer and the changeover of staff higher than in the public sector. I would therefore suggest that they are no longer necessarily the best comparators.
	The Government's contestability prospectus cited six different types of contestability programmes which could be used: contests held to commission alternative provision if existing providers fail to provide or deliver a satisfactory improvement plan; market testing; extension of partnership working and sub-contracting; competitions to run new businesses; pathfinder projects to find new solutions; and new competitions for previously competed services.
	Historically, the Probation Service has always worked in partnership with the voluntary sector and the private sector. The target set by the Home Secretary for contracted-out services to increase to 10 per cent will only take us back to the situation that prevailed before 2001. It is not seen as a problem; nor do we on these Benches have a problem with the idea that we should tap into as wide a range of probation providers as possible, including the voluntary and private sectors, to enhance and develop standards and the ways in which we can reduce reoffending and make our society safer. More effective case management and better-targeted interventions should be a constant goal for providers. However, as we have argued elsewhere, this is not a conventional market as it is understood by the private sector. Evidence—we have been talking a lot about evidence today—that contestability achieves the desired results is thin on the ground to say the least.
	We therefore have strong reservations about the idea that contestability and the sometimes crude battles of the market place are an entirely appropriate means of meeting the needs of often very vulnerable people.
	We entirely accept that it is essential that all players in the field are encouraged to raise their game and the standards of practice as well as principle, which is why we have consistently argued for the development of partnerships in the provision of probation services. I have cited how the Scottish model has worked and argued for the duty to co-operate between agencies in England and Wales. We have heard how such an ethos exists in children's services and issues of racial equality. It applies in youth offending teams and MAPPA. It is an approach that sits more comfortably with the nature of the work in which all these agencies are engaged. A client needs best practice in achieving the highest standards, which are not necessarily achieved by pitting organisations against each other—especially when a multiplicity of bodies is engaged in the process. We cannot risk losing all that we think is best or, as the noble Lord, Lord Judd, said, throwing the baby out with the bathwater.

Baroness Scotland of Asthal: I thank the noble Lord, Lord Ramsbotham, for his apology in relation to what he said on two or three occasions last time the Committee met. It is clear that 60 per cent differs very greatly from what is less than 2 per cent of the London probation staff, and no reference is made to front-line staff. Indeed, front-line staff will not be affected by any redundancies. The posts are being considered for redundancy from within senior management but will not necessarily amount to 61. I am very grateful to the noble Lord for apologising for misleading the Committee.
	Court work has been an area of particular interest and concern as the Bill has progressed through the other place and here. I remind the right reverend Prelate that Clause 4—an amendment which was made in the other place—now gives real relief. It goes directly to the point that he makes. Clause 4(2) states:
	"In this section 'restricted probation provision' means probation provision which—
	(a) is made for a purpose mentioned in section 2(1)(a) or (b); and
	(b) relates to the giving of assistance to any court in determining the appropriate sentence to pass, or making any other decision, in respect of a person charged with or convicted of an offence".
	That provision will stay in place unless and until it is changed by an affirmative resolution made by both Houses. Therefore, the assurance that the right reverend Prelate seeks in relation to pre-sentence reports is catered for.
	Several Members of the Committee mentioned an anxiety. It was mentioned by the noble Lord, Lord Waddington, echoed by the noble Baroness, Lady Linklater, and supported by the noble Lord, Lord Ramsbotham. There is no difference between us on the necessity to eradicate any form of conflict of interest. However, the right reverend Prelate is right that one cannot legislate for that in the way that is proposed. I say to the Committee as lightly as I can that some in the voluntary sector assert that the Probation Service already has the opportunity both to write reports and to carry out the work. Some in the voluntary sector believe that they could do that work more effectively and appropriately and achieve better outcomes. Because there is no lever to oblige the Probation Service to act in partnership, it does not have the opportunity to do so. Those not in the public sector, particularly those in the voluntary sector, have asserted that there is a monopoly through which the Probation Service is able to write the reports and then to guarantee that it—a public sector body—also does all the work. I am not saying that one side or the other is right. However, it depends on where you stand as to whether you think there is a conflict of interest here. We want no one to have that conflict of interest.
	I understand that there is genuine anxiety about the risks of a conflict of interest arising if one organisation—no matter which it happens to be—both proposes and provides outcomes for offenders. There is concern that its advice might be skewed towards those outcomes which it provides. But bearing in mind what I have just said, we may be making too much of this. After all, we have that situation under the current arrangements.
	A number of safeguards are therefore in place to ensure that pre-sentence reports are developed appropriately. First, when the court requests a pre-sentence report it also provides an indication of the expected sentencing outcomes, so that the report can be focused accordingly. Secondly, the report must then adhere to national standards, which we will discuss in more detail under a later set of amendments. Thirdly, there is clear guidance on the type and structure of report to be provided, based on the seriousness of offence and appropriate response.
	More generally, the development of a more holistic performance management framework, coupled with the introduction of commissioning and contractual relationships, will bring greater transparency to the process and make it easier to spot any potential difficulties which may arise.
	However, I understand that there is still anxiety that these risks might increase if non-public sector providers were involved. As I have indicated, I am not sure that that is the case, but I understand that anxiety. Certainly, all the standards and guidance I have just mentioned would apply to all providers, from whichever sector they came. It is absolutely critical that we have parity of treatment.
	But in any case, as I indicated, non-public sector providers will not advise courts in the foreseeable future. As I made plain, that is the effect of Clause 4, which prevents the Secretary of State contracting with a non-public body for the giving of assistance to courts. This restriction can be lifted only by means of an order subject to affirmative resolution. I assure the Committee that before that could be done, one would have to produce cogent information to persuade both Houses that it was appropriate.
	The statutory restriction does not cover the Parole Board. However, this area of work is covered by the commitment we have previously given; namely, that for the next three years we will let contracts for offender management only with the public sector. Advising the Parole Board is an important area of probation work, but the service produces far fewer parole reports than it does court reports, and we think that the risks of genuine conflicts of interest are fewer.
	However, if the Government ever seek to lift the restriction in Clause 4, I accept that the conflict of interest point will need to be addressed. But it will require more than a clause in this Bill. It will require practical measures which take account of the state of the market, the nature of the providers, the contractual provisions, incentives, performance management arrangements and so on. The Government would need to provide details on these issues in order to secure the support of the House. If I have learnt anything, I have learnt that much.
	However, we are not yet at that point. It is helpful to have the opportunity to discuss these issues, but the clause is neither necessary now, nor does it provide sufficient safeguards for the future. On that basis I invite the noble Baroness, Lady Anelay, to withdraw the amendment, confident, as she must be, that these important issues would need to be addressed.

Lord Dholakia: I declare an interest in that for nearly 25 years I have been associated with Nacro, the National Association for the Care and Resettlement of Offenders, which has considerable interest in the amendment. Equally, the Government's emphasis on voluntary organisations effectively means that Nacro would very much benefit if the amendment were to be carried.
	The new clause requires that at least 7 per cent of probation budgets should be used for services provided by charities, that contracts with charities should provide full cost recovery and that decisions to award contracts should take into account providers' arrangements to ensure equality and diversity in their operations. On that point, I have no difficulty, given that I have received appropriate assurances from the Minister.
	At Second Reading, there was unanimity across the House that voluntary organisations play a vital role in the rehabilitation of offenders. In particular, the sector has expertise in delivering high-quality services in accommodation, employment, education, monitoring, addictions, mental health, working with offenders' families and community engagement. Those services are crucial to the reduction of reoffending. For example, the likelihood of reoffending by ex-prisoners who obtain and keep a job is cut by between a third and a half, depending on which research study you look at. Getting offenders into stable accommodation reduces their reoffending rate by at least a fifth. Ex-offenders with support from a family are reconvicted at a rate of between a half and a sixth of similar offenders without family support. One study showed that offenders who receive educational help reoffend at a third of the rate of similar offenders who do not receive such help. Involving offenders in drug rehabilitation reduces the volume of reoffending by about 70 per cent.
	These effects are interrelated; for example, it is harder to get a job without basic skills and it is harder to get one if you are homeless. Offenders who are homeless and drifting are less likely to sustain the motivation to complete a drug rehabilitation programme and to change their offending behaviour. NOMS has developed targets to get more offenders into employment, sustainable accommodation and to improve offenders' education, and to involve them in drug treatment programmes. If these targets are to be achieved, the involvement of voluntary and community organisations will be crucial.
	Yet, the history of the past few years has shown that the Probation Service has often been reluctant to engage the voluntary sector in partnerships, except when it has been required to do so, either by legislation or by centrally driven targets. Until 2001, the Probation Service had an official target of devoting 7 per cent of its resources to partnerships with the voluntary sector. While it never quite achieved that percentage, the target pushed up the proportion of the service's budget devoted to such partnerships to around 5 per cent. However, the 7 per cent target was removed in 2001. After that, the proportion of probation budgets spent on contracts with the voluntary and private sectors combined plummeted to less than 2.5 per cent. That cannot be a healthy sign for voluntary sector involvement in probation work and does not project a happy picture.
	Faced with the threat of contestability, the Probation Service has, somewhat belatedly, begun to remedy this. It has adopted a target of devoting five per cent of its budget in 2006-07 and 10 per cent in 2007-08 to partnerships with the voluntary and private sectors. As a result, the proportion of probation budgets devoted to such partnerships has now increased to around 4 per cent. So we are seeing some progress, but not sufficient to meet the objective set by the Government.
	However, there are two reasons why it would be preferable to put on the face of the Bill a requirement for a specified percentage of probation budgets to be provided by the voluntary sector. First, the Probation Service's recently adopted 10 per cent target is not a statutory requirement. There is nothing legally to stop the service from reversing this policy, abandoning the target and reverting to the position where a derisory proportion of its budget was devoted to partnership with the voluntary sector.
	Secondly, the service's non-statutory 10 per cent target applies not only to contracts with charities but includes contracts with the private sector. It would be theoretically possible for the service to meet this target by devoting 10 per cent of its budget to contracts with Serco, GSL, Group 4 Securicor, Reliance, Calyx and other private providers and having no contracts with the voluntary sector at all. Many charities fear that private sector agencies will win contracts in preference to voluntary organisations, not because they are better at the work but because they have more resources. This means that they can put teams of people onto the intensive process of writing bids and can produce attractive bids at short notice, which charities cannot, given their more limited resources.
	By specifying a minimum level of contracts with the voluntary sector, the new clause would guard against the risk of the voluntary sector's unique contribution being squeezed out through this process. Put simply, past experience shows that the Probation Service is unlikely devote a significant percentage of its budget to voluntary sector partnerships unless it is required to do so—and the amendment would ensure that.
	The new clause also requires that contracts with charities should reimburse them for the full cost of their services. One problem is that, all too often, statutory funders have been unwilling to reimburse charities for a realistic proportion of their overhead costs, such as financial administration, IT costs, human resources and staff training, which are necessary to provide services effectively. NOMS has recognised the need to remedy this in its policy statements. For example, the NOMS document Improving Prison and Probation Services: Public Value Partnerships included a commitment to:
	"Contract terms which recognise the principle of full cost recovery, ensuring that publicly funded services are not subsidised by volunteers or other funding".
	Policy statements are all very well, but experience shows that they are not always translated into practice when procurement processes start. For several years now, successive versions of the Government's compact on relationships between the Government and the voluntary sector have required contracts with the voluntary sector to provide full cost recovery and to guarantee funding for a minimum of three years. Yet the Charity Commission recently found that the majority of contracts between government departments and charities do not provide full cost recovery and last for only one year at a time. Unless a requirement for full cost recovery is written into the Bill, there can be no guarantee that the stated intentions of policy documents will become a reality.
	Finally, the new clause requires that, in awarding contracts, the Secretary of State should take into account the arrangements which providers make to promote race equality. As I said, I am delighted that we have an assurance from the Minister on that matter.
	The work done by voluntary organisations and, in particular, Nacro, in assisting in the resettlement of offenders over all these years comes to hardly anything when, over a period of time, insufficient funds are made available and grants are cut at the whim of the Government. We have seen example after example of notices being issued to hundreds of staff who have been unable to maintain a job or provide a service. It will be to the detriment of the Bill and the Government if we are not able to ensure that charities have adequate resources to create an effective partnership in probation work. I beg to move.

Lord Ramsbotham: I support everything that the noble Baroness, Lady Anelay, has just said. I am glad that the noble Lord, Lord Dholakia, has raised the issue of charities. Like the noble Baroness, I commend him for almost everything in the amendment, except that, again like the noble Baroness, I stick over the inclusion of the figure of 7 per cent. I do not like ceilings in these matters. Of course, charities will be part of the partnership and one would encourage that, but things may be changed in annual plans and there may be different opportunities in different places. I quoted the experience of the Youth Justice Board. You have to be certain that the providers will be there when you try to find them, and they may not be.
	I am particularly glad that subsection (3) was mentioned. Although I am sure that the noble Baroness has seen it, I draw to her attention a report by the Charity Commission entitled, Stand and Deliver, which was published in February 2007. It contains some very disturbing information from the charity sector about how few charities—only 12 per cent—are paid in full in government and public sector contracts. The commission goes on to speculate that this is bound to affect the willingness of charities to become involved in this sort of work in case they are not paid, because they simply cannot afford to go on in that way.
	The Charity Commission also issues a caution. It says that charities must bear in mind that the mission, which allows them to have charitable status, must not be strayed from. If they enter into contracts with commissioners in the public sector, there is a danger that the requirements of the commissioners will affect that mission. If that happens, their charitable status will be at risk and the trustees will be liable.
	Attention to all this has been carefully drawn together in a splendid report by Clinks, a hugely reputable and successful organisation which welds together voluntary sector support. Of course, the bigger charities are more able than the smaller ones to withstand this sort of commercial pressure, but it is the small, local charities all over the country that deliver a very large amount of the valuable work which I suspect probation supervisors, in particular, will need in supervising the low-level offenders for whom they will be responsible.
	As I said, I am enormously glad that the amendment has been put forward but I have concerns about specifying a figure of 7 per cent.

Lord Northbourne: I am amazed by what I have heard. I do not fully understand what is meant by "contestability". I should have thought that, if the service provided by the voluntary organisation was a better service, it would be in a position to negotiate a better deal. Furthermore, I am not entirely clear what "commissioning" means. I should have thought that it meant entering into a contract with the sub-contractor to do the job. It would be very careless of the charities if they did not ensure that the contract provided for the period of funding and the terms of withdrawal and so on.

Lord Bassam of Brighton: I know that and the noble Lord is right to point it out. However, I am slightly amused that he has tabled an amendment to follow the point through. We are making progress.
	As with many of the amendments that we have discussed in Committee, there is much with which we agree. As my ministerial colleagues and I have made clear from the outset, we are absolutely committed to greater involvement by the voluntary and charitable sector in the delivery of probation services; that is the key motivation for this legislation. We believe that those organisations have much to offer in the fight against reoffending, and we have been hugely heartened by the support that many organisations have shown towards the proposals in the Bill; that support has been reflected in the content of the debates so far, not least on this amendment.
	However, we differ from the noble Lord and the noble Baroness who contributed from the Liberal Democrat Benches on some points of principle and, in particular, on this. We do not believe that it is appropriate to set targets for the amount of work that should be delivered by any particular type of provider. We share some of the concerns that have been raised from the Cross Benches on that issue. We think that the guiding principle should be which provider is the best able to deliver the service in question. Our commitment is to a mixed-economy provision: what is best for the service and not from which sector they come.
	As the noble Lord reminded the Committee, we have targets in place to encourage probation boards to make greater use of alternative providers in the delivery of services where that is more effective. We are doing that in response to the concern that the service is currently doing far too much in-house, as the noble Lord, Lord Dholakia, made clear in his comments. That is not a long-term solution, as my right honourable friend the Home Secretary made very clear in another place when he said:
	"In future, we shall abolish the existing targets and replace them with an entirely different type of aspiration. In future, the aspirations—the targets—will not be based on the a priori assumption that there is a level of non-public sector work that must be carried out, whether or not it gives best value or is from the best provider. That would be a dogmatic approach that could unjustifiably force work out of the public sector. No a priori assumptions will be made under our approach".—[Official Report, Commons, 28/2/07; col. 1019.]
	It is hard to argue with that and I am more convinced of that argument the more I have listened to the debate.
	I turn to other aspects of the amendment. Subsection (2) of the proposed new clause refers to the contractual arrangements that the Secretary of State may make with probation trusts or other providers and to the subcontractual arrangements that trusts and those other providers may make with charities. The contracts that are let by the Secretary of State will, of course, contain a substantial number of standard provisions. Work is currently under way to draw up model contracts in readiness for the establishment of the first trusts. But contracts are, by their very nature, the outcome of a process of negotiation between two parties in the light of circumstances at the time. For that reason, we argue that it would be entirely inappropriate to seek to impose elements of that contract by means of secondary legislation. The same goes for the subcontracts that trusts and other providers may make with charities, or indeed with providers in other sectors.
	Subsection (3) has exercised a number of Members of the Committee this afternoon. It relates to arrangements with charities to make provision for full cost recovery. I understand those arguments. I, too, have been involved in charity organisations—I have worked in the voluntary sector—and I entirely understand why noble Lords have drawn attention to this. The Committee will be reassured to hear that we are fully committed to the principle of full cost recovery. Our intention is that that will be reflected in the tendering and contractual process, which means that the voluntary sector will be encouraged to submit bids that recover the full costs.
	Subsection (4) would require the Secretary of State to have regard to the arrangements made by contractors for diversity issues. I heard the note of caution sounded by the noble Lord, Lord Hylton. We have already discussed the importance that we attach to this matter and the fact that the relevant duties will be placed directly on providers by the legislation. I confirm that potential providers' records on these issues will be considered as part of the process of assessing bids. That is a powerful statement, because we would be able to look at and measure the record of those who aim to enter this provision area.
	To summarise, the Government are very much opposed to the idea of targets for which services should be delivered by which sector, but we are firmly committed to greater involvement of large and small organisations in the voluntary and charitable sectors and we are working hard to ensure that the right systems are in place to enable them to make a full contribution.
	It is only fair to record that the voluntary sector is helping us to get this right and is fully engaged through our various stakeholder and advisory groups, including the voluntary sector and faith alliance. We are developing a strategy for building the capacity of the third sector to shape and deliver services and we are working with government departments to remove barriers by simplifying and streamlining regulatory and reporting requirements. Often the complaint is that those requirements are too constraining. We aim to deal with that issue. Our National Provider Network will inform commissioners of existing and potential providers and enable us to communicate opportunities to providers as they arise.
	The noble Lord, Lord Dholakia, made another point, which I may have missed. I believe that he expressed concern that, without a target for subcontracting for the voluntary sector, the Probation Service simply will not do it. I understand that point. It is why we are using the commissioning structure set out in the Bill, so that the Secretary of State can use his powers, either to contract directly with other providers or to ensure that trusts and other providers do exactly that. We can tackle that important issue. With the powers that the Secretary of State will have vested in his office, it will be possible to make that critical intervention, thus ensuring that the subcontracting process for those services is effective in reaching out to other providers and in involving them more fully, so expanding that role, as the noble Lord argued. I hope that the noble Lord will now feel able to withdraw his amendment.

Amendment, by leave withdrawn.
	[Amendments Nos. 148 and 149 not moved.]
	Clause 28 agreed to.
	Clause 29 [National Statistician: executive functions]:
	[Amendment No. 150 not moved.]

Baroness Noakes: I shall speak also to the other amendments in the group that stand in my name and that of my noble friend Lord Howard of Rising. These probing amendments concern the executive functions of the National Statistician set out in Clause 29, the functions of the board and who actually controls the exercise or delegation of those functions. The board is set up with a number of functions, as set out throughout the Bill, particularly in Clauses 8 to 19. These are explicitly drafted in the Bill for the board. We have debated whether some or all of these functions should be assigned to the National Statistician and we will be returning to that subject at later stages of the Bill.
	When we get to Clause 29 and the National Statistician's functions, we find in subsection (2) that:
	"The National Statistician may ... exercise any of the functions of the Board",
	and, further, in subsection (7) that he "may delegate" the functions,
	"to any other member of the executive office".
	I am not sure that is the right scheme of powers. If the board is given functions under the Bill, it is the board which should decide on how they should be exercised. That is separate from the National Statistician being given defined powers under the Bill.
	The Minister was keen on citing the corporate practice and the combined code when we debated the structure of the board right at the beginning of Committee. What the Bill does is very far from commercial practice. If this was a listed company, the board would have the power to do everything and would formally set down those things it reserved to itself.
	The premise behind these amendments is that it cannot be right that the National Statistician has the power to exercise any of the functions of the board without reference to the board. I have tabled two alternative ways to deal with this. The first is, in Amendments Nos. 151 and 160, to delete Clause 29(2), (7) and (8), which would make the Bill silent on who is to exercise the functions. I believe that it would remain open to the board to empower the National Statistician to carry out all or any of its functions and to delegate to other members of the executive office.
	I do not believe that removing the subsections would prohibit the board and the National Statistician from working on a perfectly satisfactory basis, but the board would be in the driving seat. However, if there is to be some explicit mention of the National Statistician's powers to carry out the functions of the board and to delegate them as necessary, they should be subject to the consent of the board, which is what Amendment Nos. 153 and 161 achieve. A further option, which I have not drafted, would be to let the board decide what functions it reserved to itself. That would line up with practice in the commercial world. My two sets of amendments achieve the same result. I ask the Minister to tell us what role the board will have under the Bill as it stands. It seems that the National Statistician has total freedom to choose what he or she does. I beg to move.

Lord Moser: The trouble with this topic is that the amendments touch on what we came to call the muddle of the whole structure of the relationship between the National Statistician and the board, which the Minister will come back to at a later stage. It is therefore difficult to discuss them totally separately. On the whole, I support the amendments, but I want to talk about a particular problem, which may be the product of my suspicious mind. From the very beginning, when we first set out on this route after the Chancellor had made his proposal, I had the feeling that the Treasury, where this all came from, was rather in favour of a somewhat executive board. Gradually, that was watered down and became more non-executive, which we have discussed at some length.
	My worries have returned because of the point made by the noble Viscount, Lord Eccles, and the announcement last week of the appointment of a non-executive chairman. It was not so much the salary that worried me; I cannot comment on that because everyone gets such high salaries these days that I can only congratulate whoever gets this job. I am much more worried about the three days a week. In my time as National Statistician and in that of past National Statisticians after me, it was very nice to have Ministers in charge. They may occasionally have gone slightly too far into the political arena, but they basically left one alone. They certainly did not spend three days a week in charge of us. I worry about the concept of a non-executive chairman spending three days a week "managing" the National Statistician, as one document put it.

Lord Davies of Oldham: The Committee will be pleased to hear that I agree with every sentiment expressed by the noble Baroness about the objective of keeping assessment separate from the production of statistics. That is our intent, too, and I emphasise that we do not think the amendments are necessary to achieve our shared goal—a goal shared by all those concerned with the effective operation of the board. Clauses 29 and 31 make clear that the head of assessment is not to be part of the National Statistician's executive office, as the noble Baroness recognised, nor is the head of assessment to take part in statistical production.
	As the staff working on assessment will report to the head of assessment, it follows that these staff are not part of the executive office, nor will they work on statistical production. We do not need to state this again in the Bill because it is clear that we have identified the need to separate the head of assessment from the production of statistics. However, I ask the Committee to consider whether there is a real difficulty with the fact that they are on the same board.
	Let me take an area in which inspection plays its part in a product that we all hold very dear to our hearts; education. It is possible for the inspectorate to be part of the board and represented on it. The inspectorate has an entirely different job and a different responsibility—it is the inspectorate of what the board is responsible for producing. There is no suggestion that because the chief executive is concerned with the promotion of educational standards, the inspectorate is somehow compromised because the inspector serves on the same board. However, it must be clear that their functions are defined as separate and that the board is there to guarantee that separation. That is exactly what is being proposed in this model.
	In Amendment No. 166 the noble Baroness has alighted upon the phrase, "so far as practicable". I recognise why she should, because there is a danger that this provision is a get-out from the position that those concerned with the production of statistics should not be involved in assessment. In the normal course of events we expect that the board will ensure that staff do not engage in the production and simultaneously the assessment of statistics. We have kept this phrase simply because it is possible that a member of staff might move from a post in the production of statistics to one on the assessment side and a small overlap in their work might result. That is not in any way, shape or form to compromise the principle on which the board will operate—to keep assessment separate from production—but working situations of that kind might arise. We simply did not want a position where a low-level overlap for a short period would cause a member of staff and the board employing him or her to fall foul of the legislation. That would render movement between the two functions very difficult indeed. But in career terms, a member of staff may well be involved at one stage in the production of national statistics and then pursue a career move on the assessment side.
	The provision is included for that purpose only, and the safeguard is that the board is charged with these two separate functions. That is set out clearly in the Bill and the board's working practices will embody them. I have illustrated the point with an example from the field of education. The noble Baroness has indicated that her amendments are probing in nature, and I certainly hope that on this occasion I have satisfied her that the Government have thought this issue through.

Baroness Noakes: Actually, it is my amendment. I should not really speak for my noble friend, but I very much doubt that the Minister response will have satisfied him, because I am not sure that he addressed his points.
	I accept what the Minister has said on information for which consent has already been given or which has already been made public. He then concentrated on disclosure outside the board. My amendment was designed to probe the procedures within the board to ensure that disclosure was made only in proper circumstances. I asked what controls would be exercised over disclosure. The Minister gave a long explanation, which I shall read carefully in Hansard, none of which dealt with controls over disclosure of information, although it dealt with security of information, passwords and so on. I was concentrating on conscious, not accidental, acts of disclosure and on how decisions were made to disclose information. The Minister's response did not deal with that, and if he were prepared to say that he would look carefully at my questions and write to me before Report, I would find it relatively easy to withdraw my amendment.

Baroness Noakes: I have given notice that I wish to oppose the Question that Clause 37 stand part of the Bill, and I do so on a probing basis. As we go through the information clauses in the Bill we shall explore a concern that personal information that comes to the board should be used for statistical purposes only and that the board should not become a conduit for personal information to become more widely available through the Government and beyond.
	Clause 37 provides that Section 44 of the Freedom of Information Act does not apply to information received directly or indirectly from the board. Hence the exemption from Freedom of Information Act disclosure which would otherwise apply to information whose disclosure is prevented by Clause 36 is ruled out. Put simply, if a government department or other public authority obtains personal information from the board, it might well be required to disclose it under the Freedom of Information Act. That seems to us to be a rather dangerous possibility. We have already seen that Clause 36 allows the disclosure of personal information in quite a large number of circumstances, which are set out in Clause 36(4). Once it arrives in the hands of another authority, Clause 37 might allow it to be disclosed further. I am aware that the other reasons for non-disclosure under the Freedom of Information Act will continue to apply, but the concern is that the public authority that receives the personal information from the board will be less assiduous than the board in seeking to justify exemptions from disclosure.
	The only example given in the Explanatory Notes and in another place for requiring this curious clause is the National Archives. The clause would allow it to publish census data after the usual time periods. If that is the only exception for which Clause 36 is designed, it could be given statutory effect on a more direct and targeted basis. When the Minister replies, will he say whether there is any other reason for the existence of Clause 37? If it is aimed at the National Archives only, it would be safer if this provision, which modifies the impact of the Freedom of Information Act, were restricted to that particular instance. The unlimited scope of Clause 37 gives us cause for concern. We believe that the presumption in the Bill should be against facilitating the disclosure of personal information, but Clause 37 seems to start from the opposite position.

Lord Davies of Oldham: I will certainly take up the option of writing to the noble Earl, but I hope that I have sufficient recollection of what transpired earlier to be able to reassure him on his anxieties, and also to meet the points indicated by the noble Lord, Lord Howard of Rising. We referred in earlier amendments to why we think Clause 8 is a necessary part of the Bill and gave illustrations of how the ONS has used contractors as part of its work. These examples demonstrate how allowing the board to pass information to third parties which are providing a service to the board can improve the way in which the board works. We are merely building on past practice in those terms. My noble friend gave the illustration of the University of Southampton and the work that it has done. That is also true of certain IT providers.
	The Committee will want to be assured that a range of safeguards exist to protect any personal information shared with the service providers. I want not only to emphasise what has already been stated but to express it as clearly as I can. First, as clearly set out in the clause, the board would be able to pass personal information of a service provider only if it was considered necessary or appropriate to do so for the provision of the services which it required.
	Secondly, it is intended that those receiving the data under this clause will not be able to use it for any purpose other than for the provision of the service which the board requires from them. Additionally, we would expect that the use of personal information by service providers will be explicitly covered in a contract between the board and any service provider, because the board will be fully cognisant of its obligations in those terms.
	Thirdly, any service provider would automatically be constrained by the confidentiality obligation in Clause 36, which contains a criminal sanction, as we heard in our earlier discussions. Finally, the board and the service provider will also need to have regard to putting in place appropriate data protection safeguards to ensure that any processing that occurs is consistent with the requirements of the Data Protection Act, particularly the eight data protection principles set out in the Act.
	These are strong safeguards, and rightly so. They mean that the board can share information with service providers to improve the quality and efficiency of the board's work and the statistics produced while ensuring that personal information is protected by the requirements that I identified earlier. I hope that the noble Lord will be satisfied with that response.

The Earl of Northesk: I shall also address Amendments Nos. 194, 196 and 198. As the Committee will be aware, Clauses 40 and 41 sanction the disclosure of patient registration information to the board—such disclosure duly constrained by subsections (3), (4) and (5). So far so good. Obviously, such data will be invaluable in preparing population statistics. Neither do I doubt that the terms of Clause 36(3) leach into those two clauses. To the extent that they do, that is both welcome and useful. However, given the extreme sensitivity of personal medical information, the same level of protection as exists under Clause 36 should apply to those two clauses and should be expected in the drafting. Hence the amendment. I beg to move.

Lord Davies of Oldham: I am likely to disappoint the noble Baroness by not accepting the amendments. After all, they would prevent the Secretary of State for Health, other public authorities or Welsh Ministers disclosing to the board any information from which the health condition, care or treatment provided to any person could be deduced, either on its own or when taken together with any other published information.
	The amendments could prevent the Secretary of State disclosing the information listed in the clause. That might occur if, for example, he was aware of other relevant information obtained by the board from other sources which might allow the health or condition of a person, or the care or treatment provided to that person, to be deduced. If the Secretary of State considered that he was prohibited from disclosing patient registration information altogether, the board would not be able to continue to produce population statistics.
	Although I understand why the noble Baroness and the noble Lord are concerned about the matter, given the impact that the amendments would have on outputs currently produced by the Office for National Statistics, we feel that the emphasis should instead be on having appropriate safeguards in handling the data, as we discussed on previous amendments.
	We maintain that the Bill contains safeguards in Clause 36 which include a confidentiality obligation for personal information held by the board or anyone else who has received such information directly or indirectly from the board. The board's handling and disclosure of the personal information received under the clauses will also be governed by the protections afforded by the Human Rights Act 1998 and the Data Protection Act 1998.
	Clauses 40 and 41 contain additional safeguards in that disclosure by the board of any information received under these clauses, either for the purpose of enabling or assisting the board to exercise any of its functions or to an approved researcher, can be made only with the express consent of the Secretary of State for Health. In addition, it is likely that the data sharing envisaged by Clauses 40 and 41 will be underpinned by a memorandum of understanding or a service level agreement between the board and the Secretary of State for Health. The memorandum of understanding or service level agreement would certainly cover issues such as confidentiality and disclosure. Any changes to the memorandum of understanding or service level agreement would, by its very nature, need the agreement of the Secretary of State for Health, as does the initial disclosure envisaged by Clauses 40 and 41.
	We maintain that we have a lock on this position, and that we have appropriate safeguards in this very important area. I fully respect the anxieties that have been expressed about issues of confidentiality, because they are very important. Equally, however, it is obvious that certain information is absolutely essential for gathering, deciphering and presenting statistics. There must be safeguards to protect the individual, but, as I said, we believe that we have the necessary safeguards. I hope that the noble Earl, Lord Northesk, will accept that.

Lord Evans of Temple Guiting: The amendments would prevent the Secretary of State for Health, other public authorities or Welsh Ministers from disclosing a patient's name to the board. As the Office for National Statistics does currently, the board will need access to identifiable information, including, on occasion, names, if it is to continue to produce useful and meaningful population statistics derived from patient registration information. Although the ONS never discloses names in any statistical outputs—nor would the board—names can be used to assist in the production of population statistics such as birth and mortality rates, where other identifying factors are inadequate. For example, in order to produce birth and mortality rates, it is necessary for the ONS to link patient registration information with birth and death records held by the Registrar-General, who is also the National Statistician. In many cases, the ONS can link the records by using the NHS number or other identifiers. However, this is sometimes unsuccessful because an incorrect NHS number has been identified at death or no NHS number has been given. In these circumstances, it is necessary for the board to use other identifiers, such as name, to make the necessary linkages.
	It is therefore important for there to be flexibility over the information that the board receives from the Secretary of State for Health, other public authority or Welsh Ministers. This will help to ensure that the board can continue to produce population statistics based on reliable and accurate data. Identifiable information would not be released by the board in the processing or publication of population statistics, which will all continue to be released in aggregate form.
	As Members of the Committee are aware, the board's use of this information will be governed by Clause 36, which contains safeguards, including a confidentiality obligation for personal information held by the board or anyone else who has received such information directly or indirectly from the board. The board's handling and disclosure of the personal information received under these clauses will also be governed, as I explained on the previous amendment, by the protections afforded by the Human Rights Act 1998 and the Data Protection Act 1998.
	As I said in relation to the previous amendments, Clauses 40 and 41 contain additional safeguards in that disclosure by the board of any information received under these clauses, either for the purpose of enabling or assisting the board to exercise any of its functions or to an approved researcher, can be made only with the express consent of the Secretary of State for Health. In addition, and again as I have already said, it is likely that the data sharing envisaged by Clauses 40 and 41 will be underpinned by a Memorandum of Understanding or service level agreement between the board and the Secretary of State for Health. The Memorandum of Understanding or service level agreement would encompass issues such as confidentiality and disclosure. Any changes to the Memorandum of Understanding or service level agreement, by their very nature, would need the agreement of the Secretary of State for Health, as would the initial disclosure envisaged by Clauses 40 and 41.
	In view of these safeguards, I hope that the noble Baroness will feel able to withdraw the amendment.

Lord Evans of Temple Guiting: These amendments deal with the powers to make supplementary and consequential provision in the regulations to permit data sharing. The clauses set out two examples of possible types of supplementary and consequential revision, in particular to restrict or permit disclosure of the information disclosed under these regulations. Such provision could be used to allow approved researchers access to information disclosed to the board. Naturally, such provision would need to be approved by Parliament through the affirmative procedure, along with the rest of the regulation.
	The amendments add in another example of what consequential or supplementary provision the regulations made under this power could contain—to govern onward disclosure when this is allowed by existing legislation. The amendments suggest that the regulations might need to make provision for disclosure that is already permitted. However, the clause already makes it clear that consequential provision could be made to restrict further disclosure. It is not therefore clear to us what the amendment would add.
	The noble Lord may have another type of provision in mind. Perhaps he wishes to see the possibility for consequential provision to be made to restrict use of the information by the board when it receives it. However, if that is the case, the amendment is still not needed. The enabling clauses explicitly specify—for example, Clause 44(2)—that the regulations may authorise disclosure only to enable the board to carry out one or more of its functions. They also make clear—for example, Clause 44(3)—that the board may use the information received under the regulations only for the purpose for which disclosure is authorised.
	Noble Lords might find it helpful to bear in mind that the consequential and supplementary provisions listed in the clause is not exhaustive. Included in the enabling clauses, at Clause 44(7), Clause 45(7) and Clause 46(7), are two examples of possible consequential and supplementary provision. It would still be possible and, I am sure, desirable in some cases, for the regulations to make additional provision as to use, further to these examples.
	The noble Earl, Lord Northesk, asked what other powers might be over-riden. There is nothing in the Bill that can over-ride the Data Protection Act or the Human Rights Act. I hope that the noble Earl will feel able to withdraw his amendment.